Identifier
Created
Classification
Origin
06ATHENS1480
2006-06-09 04:20:00
UNCLASSIFIED
Embassy Athens
Cable title:  

THIS LAND IS YOUR LAND, THIS LAND IS MY LAND:

Tags:  ECON EINV EFIN PGOV EIDE CASC GR 
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VZCZCXRO2971
PP RUEHAG RUEHDF RUEHIK RUEHKW RUEHLZ
DE RUEHTH #1480/01 1600420
ZNR UUUUU ZZH
P 090420Z JUN 06
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC PRIORITY 5737
INFO RUCNMUC/EU CANDIDATE COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
UNCLAS SECTION 01 OF 02 ATHENS 001480 

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EINV EFIN PGOV EIDE CASC GR
SUBJECT: THIS LAND IS YOUR LAND, THIS LAND IS MY LAND:
GREECE AGAIN CONFRONTS NATIONAL LAND REGISTRY PROBLEM


UNCLAS SECTION 01 OF 02 ATHENS 001480

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EINV EFIN PGOV EIDE CASC GR
SUBJECT: THIS LAND IS YOUR LAND, THIS LAND IS MY LAND:
GREECE AGAIN CONFRONTS NATIONAL LAND REGISTRY PROBLEM



1. (U) Summary: A major inhibitor of foreign direct
investment in Greece is the lack of a functional national
land registry (NLR). To address this problem, the GoG
recently submitted a new draft bill that once again attempts
to create a working NLR. The political, legal, and economic
issues that discourage an efficient real property marker are
broader than the lack of a functioning NLR. End Summary

Background
--------------


2. (U) Only two western European countries currently do not
have a functional NLR: Greece and Albania. Greece began to
formally address this problem as early as 1996 with an
initial 5-year plan. However, this initial effort failed due
to cost overruns, poor management and bureaucratic
maneuvering on the municipal, and prefecture level to
maintain control of the lucrative permit issuance process.
In 2000, after registering only 280 municipalities and less
than one-quarter of Greece's land mass, the initial budget of
138 million euros had expanded to over 500 million euros.
Furthermore, the European Commission took back the 100
million euros it had contributed to the registry from its
Second Community Support Framework because the GoG had not
met the NLR implementation goals it had committed to in order
to secure the funding.

Political and Legal Confusion
--------------


3. (U) The political and legal environment in Greece
continues to struggle with its inefficiency and lack of
transparency. The NLR issue exposes this struggle on several
levels and serves as a reminder that while Greece is home to
the oldest democracy in the world, its present day democracy
is one of the youngest, since the constitution currently in
use was ratified in 1975. This constitution, born in the
wake of the military junta (1967-74),takes every opportunity
to champion individual rights, but has led to an environment
of inefficiency and corruption. Lack of clear Municipal,
Prefecture, and State responsibility continue to obfuscate
the NLR landscape on issues such as ownership, transference,

building permits, and trespassing.


4. (U) One concise example of this environment that is
illustrative of the larger issues associated with Greece's
lack of a functional NLR, is the case of an amcit who
purchased 3,200 square meters of land on a Greek island. The
amcit purchased the property directly from the island's
Department of Land (DOL). After the sale was complete, a
nearby church board decided it had a legal claim to the land
the DOL had just sold and took the amcit to court. The court
in turn, ruled against the amcit and awarded the land to the
church board. The amcit then asked the DOL to replace the
land it had just sold to him with something of equal value.
After 12 years of legal maneuvering, the DOL returned the
amcit's investment, with no interest or compensation for the
time that it held the funds or the difficulty it had created.


5. (U) Another aspect of the problem is the practice of
individuals and/or small developers using arson as a means to
build on GoG designated forest land. Individuals and/or
small developers intentionally set fire to forest land, which
is protected from development under Greek law, in order to
clear the land and then build on it. Small municipalities
whose jurisdiction lies on the periphery of these forest
lands will often issue building permits and/or simply allow
the illegal construction of a home or homes on the site, even
though Greek national law requires that all burned forest
land be replanted with indigenous trees. The confusion over
ultimate legal control of land and permitting continues to be
waged between the municipalities, prefectures, the forest
service, and the GoG itself, further exposing the
inefficiencies and confusion of the land registry/land usage
environment.

Economic Obstacles: Tax Structure "...too complicated."
-------------- --------------


6. (U) The GoG recently introduced a new tax structure for
property exchange that adversely affects the overall efforts
associated with the NLR initiative. This new tax structure,
which has been called "too complicated" by Nicholas Garganas,
Governor of the National Bank, is comprised of four different
sub-taxes: a VAT tax, an automatic capital gains tax, a
property transfer tax, and a transaction levy. These taxes
are then subject to taxation on two separate property
valuation schedules. The new structure is so complicated
that Greek builders have a difficult time calculating the
fees associated with new construction; as a result, new
building permits are down dramatically since the new

ATHENS 00001480 002 OF 002


structure took effect on January 1st, 2006. Furthermore,
higher value properties are subject to two additional luxury
taxes at still higher rates.

The New National Land Registry Bill
--------------


7. (U) In early 2001, the preparation for the 2004 Summer
Olympic Games in Greece created an almost single minded focus
on Olympic preparation by both the Greek public and private
sector. Several important issues were set aside until after
the games, the NLR among them.


8. (U) In October of 2005 George Souflias, Minister of
Environment, Town Planning and Public Works, announced a new
National Land Registry bill. Unlike the 1995 effort, the new
bill will not receive any EU funding, but will derive its
nearly 1.5 billion euro budget largely from the property
owners themselves (1.1 billion euros) as the GoG moves
towards a completion goal of 2010. The strategy involves two
registration periods: the first will involve a flat fee of 35
euro for preliminary registration, after which the land will
be valued by the GoG; the second will assess a fee of 1% of
the total land value to the property owners. These fees,
coupled with additional charges for associated services, such
as duplicate documents and ownership changes, will provide
significant steady revenue for the GoG.


9. (U) When the current New Democracy government came to
power in March 2004, 22 land registry offices were in
operation and the pervious effort claimed registry of roughly
1/3 of non-state controlled land. Two years later, the GoG
has 80 land registry offices open across the country as they
begin again to confront the NLR issue on a national level. It
is worth mentioning, however, that many of the new offices at
more rural locations do not have adequate computer and
database connections for appropriate communications with the
nation's capital. While work is ongoing to address this
problem, it remains another technical challenge for the
overall NLR effort.


10. (U) Comment: In a land use environment that local Greek
businesses and international investors alike find confusing
at best and maddening at its worst, it is not difficult to
see why Greece has had difficulty attracting foreign direct
investment (FDI) and keeping its own capital at home. (Note:
The Greek private sector is one of the leading investors in
the Balkan states.) This problem becomes more acute given
the active opposition to reform from local bureaucrats,
illegal landowners and small developers who profit from the
current system. Increased transparency, improved efficiency
and overall ease of use must be established alongside the NLR
if the Greek economy is to continue its positive growth trend
in the coming years. End Comment.
COUNTRYMAN